Warm Up to Cocoa Futures on the Commodities Exchange

Like coffee, the cocoa commodities market is subject to seasonal and cyclical factors that have a large impact on price movements. Check out the price of the ICE cocoa futures contract in recent years. As you can see, it can be pretty volatile.

Credit: Source: International Cocoa Organization

Price of cocoa futures on the ICE, 2000-2010.

Cocoa is a fermented seed from the cacao tree, which is usually grown in hot and rainy regions around the equator. The first cacao tree is said to have originated in South America, where cocoa beans were used for both consumption and monetary purposes.

European traders came across the cacao tree and were so impressed with the tasty beverages made from cocoa beans that they brought some back to Europe, where cocoa beans were then turned into chocolate. From Europe, the cacao tree was introduced to Africa and, today, the cocoa trade is dominated by African countries.

Country

Cocoa Production (Thousands of Tons)

Ivory Coast

1,190

Ghana

650

Indonesia

535

Nigeria

260

Cameroon

200

Brazil

155

Ecuador

150

Colombia

50

Mexico

45

Papua New Guinea

40

Cocoa production for import and export purposes is measured in metric tons. To put things in perspective, 3.3 Million Tons of cocoa were produced worldwide in 2005.

For a more nuanced understanding of the cocoa market and the companies that control it, check out these resources: